The story of the Laffer curve and three points about Ethiopia’s tax revenue

In economics, the Laffer curve is one possible representation of the relationship between rates of taxation and the resulting levels of government revenue. It postulates that no tax revenue will be raised at the extreme tax rates of 0Pct and 100Pct and that there must be at least one rate that maximises government taxation revenue. The curve is typically represented as a graph (see the figure on the following page), which starts at 0Pct tax with zero revenue, rises to a maximum rate of revenue at an intermediate rate of taxation, and then falls again to zero revenue at a 100Pct tax rate.

In a recent commentary for the South China Morning Post, Helen Wong, HSBC’s chief executive for Greater China, shows that China’s rising generation of 400 million young consumers will soon account for more than half of the country’s domestic consumption. This generation, Wong notes, is largely transacting online, through innovative, integrated mobile platforms, indicating that it has already “leapt from the pre¬web era straight to the mobile Internet, skipping the personal computer altogether.”

When South African university students took to the streets in 2016 as part of the “Fees Must Fall” protest movement, the “decolonization of the curriculum” was among the movement’s chief concerns. It was a pivotal moment in South Africa’s history, as young people rose to demand quality and accessible education. But a crucial question was missing from the debate over fees and curricular relevance: how can changes to higher education empower Africa’s youth to drive the continent’s economic transformation?

Since the Agrarian Revolution, technological progress has always fueled opposing forces of diffusion and concentration. Diffusion occurs as old powers and privileges corrode; concentration occurs as the power and reach of those who control new capabilities expands. The so-called Fourth Industrial Revolution will be no exception in this regard.

The Dilemma of conflict and Economic Growth in Ethiopia

Although I have some reservations if indeed the official growth rates of Ethiopia are realistic, the ruling Ethiopian People’s Revolutionary Democratic Front (EPRDF) and of course the government has made an important stride and appreciable task in building major infrastructure in power, road, and rail sectors and attracting foreign investment. That has helped the country achieve better economic growth than during the time of the two preceding governments, the Dergue and the Imperial regimes. It has also positively changed the image of the country using economic and pan-African diplomacy until the political violence and crisis erupted in 2016 followed by the declaration of a six-month State of Emergency, which is extended by another four months now.